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Crypto Staking Services Might Soon be Banned as per Coinbase CEO

Armstrong believes that such a choice would be disastrous in the United States, even though the origin of the report is still being determined.

Image Credit: Bloomberg (1.1)

Coinbase CEO Brian Armstrong expressed (1) his concern in a series of tweets over claims he is hearing regarding efforts by the SEC to outlaw crypto currency staking for retail users.

Armstrong believes that such a choice would be disastrous in the United States, even though the origin of the report is still being determined.

Armstrong said:

"When it comes to national security issues, such as financial services and Web3, these skills must be developed here in the United States."

According to data (2) provided by Staked, the aggregate value of all assets staked in the fourth quarter of 2022 was $42 billion. Similarly, the total amount of incentives won by betting came to $3 billion.

Even though it includes institutional and ordinary investors, the statistic reveals the amount of interest in crypto staking. Armstrong believes such legislation will drive crypto currency firms abroad, just like it did for FTX.

It would appear that the allegation is true if we were to judge its integrity by the prior actions of the SEC and Gary Gensler.

In the past, Chairman Gary Gensler indicated that properties that may be gambled on are considered securities according to the Howey test.

According to what he said, the fact that an investor plans to earn a profit depending on other people's labor transforms assets into securities that may be gambled on.

When he made his statement, Gensler swiftly stated that he did not have any specific token in mind at the time. Interestingly, the Commodity Futures Trading Commission (CFTC) has classified Ethereum as a commodity, even though it supports staking.

Consequences of Crypto Staking Ban on Coinbase and other Exchanges

Over ten percent of the crypto currency exchange's annual revenue came from staking incentives in 2022. If the claims turn out to be genuine, Coinbase may lose some of its revenue.

This should not come as a surprise. New players have been drawn in by the allure of staking for as long as the practice has been around. Prohibiting cryptocurrency staking might reduce people's interest in crypto currencies and slow their spread across the United States.

Alison Mangiero, executive director of the Proof of Stake Alliance (POSA), thinks that a prohibition on crypto staking will have a negative impact on the United States of America's efforts to domesticate technical advancements.

Mangiero is of the opinion that a prohibition on staking services demonstrates a fundamental misunderstanding of the activity itself.

According to Mangiero, "the availability of staking service providers allows for regular Americans to engage in staking, which democratizes network consensus and validation."  

Regardless of how things turn out, it is quite evident that tension will continue to exist between the crypto business and authorities as the two parties work to create a more secure market for investors.

In the meanwhile, Coinbase Shares Have Been shown good up move ever since the start of 2023. It has doubled in value over last one month. Currently it is trading at $ 46.32, down around 7% on daily basis.

Coinbase Share Price chart Source: TV (2.1)